Also in WSJ.com:

The Experts: Energy

As part of an expanded Web presence for the Journal Reports, we have launched The Experts—an exclusive group of industry and thought leaders who will engage in in-depth online discussions of topics raised in this month’s Big Issues: Energy Report and all future Reports.

The Experts will interact with each other in a number of exciting new ways, including through a video chat on how to live, work and play more sustainably and short online posts on questions related to our newest Report here in this stream. The stream is meant to function like a conversation, flowing between participants.

A recent article discusses whether raising the U.S. gasoline tax is the best way to pay for highways. So we asked The Experts this question:Are current gasoline taxes–both state and federal–the best way to pay for needed transportation expansion and improvements? If not, what should replace them?

Read through the stream to find out what The Experts have to say and email TheExperts@wsj.com if you would like to add your own thoughts or if you have a question you’d like to ask The Experts. We will be posting some reader questions as part of the discussion.

Mark Thurber: A Carbon Tax Provides More Bang for the Buck

Should there be a price on carbon emissions, and if so, what’s the best way to do it?

Yes, there should be a price on carbon emissions. Directly pricing carbon dioxide (and other greenhouse gases) provides a far better “bang for the buck” in mitigating climate change than many of the policies that have actually been put in place (such as feed-in tariffs or tax credits for wind and solar or fleet-averaged fuel efficiency standards for automobiles). Unfortunately, policies that dole out money and hide costs are often more politically palatable than policies that make costs explicit.

In a course I taught in the Stanford Graduate School of Business, we auctioned off electricity generation portfolios to student teams and had them compete with each other in a simulated wholesale electricity market that was subject to a cap and trade system for carbon. Teams could freely trade carbon permits with each other over the course of the game. The carbon cap was effective in reducing emissions in our game, but it also illustrated some of the challenges of the cap and trade approach. Notably, there was significant uncertainty and volatility in the carbon price, which in the real world could deter investments in carbon mitigation. Unless price floors and ceilings are established to contain the carbon price within a limited band, there is significant risk that increases in economic activity can send the carbon price very high (imperiling the program’s political viability) and decreases in economic activity can send it very low (rendering it useless as a prod to investment in lower-carbon technologies). A carbon tax is significantly easier to manage than a cap and trade system. Perhaps some of the political aversion to the idea of a “tax” can be mitigated by making a carbon tax revenue-neutral.

Mark Thurber is associate director at the Program on Energy and Sustainable Development at Stanford University. His research focuses on the role of state-owned enterprises in fossil fuel production as well as how to deliver energy to low-income populations.